Govt To Import Oil, Pulses To Control Prices

New Delhi: In an effort to control the spiralling rise in prices, the Government plans to import one million tonnes of edible oil and 15 lakh tonnes of pulses, the Union Agriculture Minister, Sharad Pawar, said in Parliament on Wednesday.

Replying to a one-day debate on price rise, Pawar said that there is a scarcity of edible oil in the country. “We will import one million tonnes of edible oil and have told all public sector companies that they should import edible oil,” the Minister said. The oil will be sold at a subsidised rate of Rs 15 a litre throughout the country.

The Minister announced that 15 lakh tonnes of pulses will be imported with an order of 11.86 lakh tonnes being placed before March 31 and added that the Government has already abolished import duty on edible oils and pulses.

No scarcity of rice

The Agriculture Minister said that there was no scarcity of rice in the country and the Government has taken steps such as reducing the import duty to zero and putting restrictions on export of all varieties of rice except Basmati. Pawar also informed the House that production of rice was better than last year and expressed confidence that the Government will procure more than required. Similarly, wheat procurement this year was expected to be 150 lakh tonnes as against 111 lakh tonnes last year, Pawar said.

While emphasising that domestic food grain production was satisfactory, Pawar said prices had risen as the purchasing power of poor people had increased due to welfare schemes such as NREGA and, therefore, the demand had gone up tremendously.

“I would like to assure all members of the House that the policy of the Government is to control inflation as well as to ensure that the growth rate momentum does not decline,” he said.

International aspect

Pawar said there was an international aspect to the price rise as there was a global shortage of food grains and climate change was also having an impact on global production. The Minister, however, asserted that the increase in prices of essential commodities such as wheat and rice in the country was the lowest in the world when compared to other countries.

Branded Oils May Record Slower Growth

Chennai: The sharp price rise in edible oil prices may trim growth rates for branded oils in the near term. Price trends from here on may depend on the global supply scenario, rather than on fiscal measures initiated in India. These were the views expressed by Angshu Mallick, Assistant Vice-President Sales & Marketing of Adani Wilmar, one of the largest marketers of branded edible oil in India.

When asked what impact the recent spiral in edible oil prices may have on the branded oil market, Mallick said, “There may be no shift from branded to unbranded oils. But I do see the rate of growth in the consumer pack segment declining from 20-22 per cent levels to about 15 per cent levels. I wouldn’t attribute this to the edible oil price increase alone, but to inflation in general.”

He points out that the price increase in the food basket — the sharp spurt in pulses, wheat and vegetables — has hit the consumer hard, forcing her to re-evaluate her entire grocery bill.

Will the recent import duty cut on edible oils help temper prices? Though the duty cut has reduced prices by Rs 5-6 a litre at the retail level, much will depend on the global supply scenario, says Mallick. “The market was expecting a duty cut in the Budget; when that didn’t happen prices went up. Prices have corrected recently on the duty cuts; fortunately, international prices have also come down in this period. If global prices shoot up again, there is nothing that the Government can do. Fiscal measures can only take you so far. I think the price outlook will change only if international prices soften,” he says.

Building presence

Having established its brand Fortune, as the largest soybean oil brand sold in consumer packs, Adani Wilmar, a 50:50 joint venture between Wilmar International and the Adani group, is now attempting to build its presence in the packaged sunflower oil and coconut oil segments.

The company, which holds a 40 per cent market share in the branded soyabean oil market, also says that Fortune has recently become the second largest selling sunflower oil brand in Tamil Nadu, after regional brand- Gold Winner. A foray into packaged coconut oils (Naturelle) leveraging on the existing distribution reach, is also on.

Consistency of quality, wide availability and an ad campaign with a Chennai flavour created by O&M Dakshin, have helped the Fortune brand build share, he says.

“The brand’s positioning — guilt-free eating — clicked with consumers. Most edible oil brands tend to have Mumbai-based agencies, but we felt that we needed a South-based agency to crack the Tamil Nadu market,” he elaborates. Tamil Nadu accounts for about 50 per cent of the total sunflower oil sales in consumer packs.

The branded edible oil market tends to be fragmented based on regional tastes.

While soyabean is the oil of choice for consumers in Madhya Pradesh, Maharashtra, Bihar and Punjab, sunflower oil is consumed mainly in the southern States.

While branded soyabean oil is growing at 20-22 per cent annually, the branded sunflower oil market is expanding at 6-8 per cent.

Mallick admits that edible oil, even when sold in consumer packs, offers limited differentiation possibilities and that its consumers tend to be quite price-sensitive, even in urban markets. Fortune sunflower oil is priced slightly lower than the market-leading brand in Tamil Nadu, to persuade the trade to push the brand more aggressively.

India May Hike Crude Oil Taxes To Finance Storage

New Delhi: The government might increase cess and duty on crude oil to raise money to fill the 5 million metric tonne (MMT) capacity strategic crude oil reserve storages, Minister of State for Petroleum and Natural Gas Dinsha Patel said here Tuesday.

The government is setting up storage capacities at Visakhapatnam in Andhra Pradesh and Mangalore and Padur near Udipi in Karnataka at an estimated cost of Rs.23.97 billion to create strategic crude oil reserves to meet emergency situations like disruption in imported crude supply.

"While oil industry development board is financing construction of strategic storage, the government could consider a temporary increase in the cess on domestic crude and customs duty on imported crude to meet the cost of filling crude," the minister said.

"While Vizag (Visakhapatnam) is proposed to have 1 MMT crude storage capacity, Mangalore and Padur storages will have capacities of 1.5 MMT and 2.5 MMT, respectively," the minister said.

"The Padur storage is expected to be commissioned by December 2011, followed by completion of Vizag and Mangalore storages in January and July of 2011," Patel informed the Rajya Sabha, the upper house of Indian parliament.

Crude Oil Import Bill Jumps Over 29%

New Delhi: Crude oil import bill has jumped 29.5 per cent to $48.027 billion in the first nine months of current fiscal on increased volume of imports. India imported 91.224 million tons of crude oil for Rs 192,974 crore ($48.027 billion) in April-December 2007, as against import of 82.774 million tons for Rs 169,175 crore ($37.095 billion) in the corresponding period of last fiscal, according to latest data from the Petroleum Ministry. Run-up to Budget 2008-09

Import of 15.576 million tons of petroleum products cost the nation Rs 41,049 crore ($10.173 billion) in first nine months of current fiscal while export of 29.614 million tons of products earned the country Rs 78,286 crore ($19.395 billion).

The net oil import bill (crude oil import plus petroleum product import minus exports) in April-December was Rs 155,737 crore ($38.805 billion), as against Rs 134,655 crore ($30.359 billion) in the same period a year ago.

In April-December, India imported 4.79 million tons of naphtha for Rs 14,113 crore, 1.985 million tons of LPG for Rs 5,602 crore and 1.978 million tons of kerosene for Rs 6,445 crore.

Exports during the period were led by 10.869 million tons of shipments of diesel for Rs 29,208 crore and 7.612 million tons of naphtha for Rs 21,707 crore.

Consumers Find Ways To Beat Vegetable Oil Prices

New Delhi: Rising prices of cooking oils has forced the consumers to either reduce their consumption or opt for less costly oil.

High prices have started burning holes in the consumers' pockets, forcing them to sparingly use the edible oil in making 'pakodas' and 'samosas', with housewives switching over to less costly culinary oil like mustard. Run-up to Budget 2008-09

"We were earlier consuming 5-6 litres of refined soyabean oil in a month. But, due to a sudden rise in its rate, we have cut down its use and are now increasingly trying refined mustard oil for frying purpose," a Delhi-based consumer Amrender Singh told reporters.

"I have started buying only mustard oil, which was earlier used for preparing non-vegetarian dishes. The rise in the soyabean oil prices have made it out of our reach," a housewife Megha Jha said.

The demand for refined mustard oil is picking up in the market as it is comparatively cheaper than refined soyabean oil. Mustard oil prices are ruling at around Rs 57 a litre in the wholesale market here, lower by about Rs 5 per litre against refined soyabean oil.

As the price of soyabean oil has jumped by around 22 per cent to Rs 67-70 per litre in the past three months, consumers are left with no choice but to reduce the intake, they said. Mustard oil prices too have increased by 11.28 per cent in the wholesale market in the last three months, but mustard oil is still available at affordable levels to consumers, they added.

Oil Palm Needs Price Stability Fund

Vijayawada: The Union Government should think about setting up a price stabilisation fund for oil palm, in order to promote and sustain cultivation on a large scale, according to Dr P. Rethinam, President of the Society for Promotion of Oil Palm Research and Development, and former Director of the National Research Centre for Oil Palm.

Dr Rethinam, who was here earlier this week to participate in a three-day conference on the crop, said in an interview that when prices crashed seven years ago, there was a lot of uprooting of oil palm in Andhra Pradesh and “the farmers are now regretting it. They could not at that time withstand the crisis. We cannot afford such setbacks. There needs to be a price stabilisation fund to withstand such vicissitudes.”

However, he said, the enterprising farmers of the State had come out of the crisis and there was a boom in cultivation now. “In fact, there has been such a boom during the past two years that there is a sudden shortfall of plant material. It takes at least one year to prepare the plant material and we should plan our cultivation in advance,” he said.

‘Crop of controversy’

Terming oil palm a crop of controversy from the beginning, Dr Rethinam said that since the start the sceptics were raising all sorts of doubts about the crop. “They used to say that it will not be possible to raise oil palm in irrigated conditions and that it will deplete water resources in the area. All these assumptions have been proved wrong. Andhra Pradesh has emerged as the number one State, with 75,000 hectares. But there is still a long way to go, as the potential is four lakh hectares in the State,” he said.

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He said there was a need to follow a uniform pricing formula all over the country, as currently different states follow different formulas. “Of course, in Andhra Pradesh farmers are now getting a good price, more than Rs 5,000 per tonne of fresh fruit bunches. But there should be a uniform formula,” he opined.

Board needed

Dr Rethinam pointed out that he was also in favour of setting up a central authority, or board, for oil palm cultivation and for declaring it a plantation crop, to overcome the land ceiling problems. “These two steps should be seriously considered for rapid area expansion in the country,” he said.

There should also be comprehensive crop insurance for oil palm, he pleaded. “Above all, strong political will is required to give a tremendous boost to the crop. There is really no alternative for attaining edible oil security.”